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The European Court of Justice Finds Spain in Breach of Article 7

The European Court of Justice judged 24 November that Spain had not transposed correctly the provisions concerning the balance of interests of EC Directive 95/46 on personal data protection and that consequently Spanish law is in breach of Article 7(f) of the directive.

The disputes in the main proceedings and the questions referred for a preliminary ruling were the following.

Article 7 of Directive 95/46 provides a list of alternative conditions that must be fulfilled in order for the processing of personal data to be lawful. Among such conditions are the data subject’s consent, or the "balance of interests"—Article 7(f)—which provides that the processing of personal data is lawful if it is “necessary for the purposes of the legitimate interests pursued by the controller or by the third party or parties to whom the data are disclosed, except where such interests are overridden by the interests or fundamental rights and freedoms of the data subject which require protection.”

However, according to the transposition in Spain, in the absence of the data subject’s consent, and in order to allow processing of personal data necessary to pursue a legitimate interest of the data controller, Spanish law requires not only that the fundamental rights and freedoms of the data subject be respected, but also that the data appear in public sources (Organic Law 15/1999 and Royal Decree 1720/2007).

As a consequence, such requirement prevents any data controller to process data necessary to pursue its legitimate interest if such data do not appear in public sources, and thereby forces in practice all Spanish data controllers to obtain the data subjects' consents.

The Spanish National Association of Credit Institutions (Asociación Nacional de Establecimientos Financieros de Crédito—ASNEF), on the one hand, and the Spanish Federation for Electronic Commerce and Direct Marketing (Federación de Comercio Electrónico y Marketing Directo—FECEMD), on the other hand, have brought administrative proceedings challenging such transposition. In particular, ASNEF and FECEMD took the view that Spanish law adds a condition which does not exist in Directive 95/46. The Spanish Supreme Court considered that the merits of the actions brought by ASNEF and FECEMD depended on the interpretation by the European Court of Justice of Article 7(f) of Directive 95/46. Accordingly, it stated that, if the European Court of Justice were to hold that Member States are not entitled to add extra conditions to those required by that provision, and if that provision were to be found to have direct effect, Article 10(2)(b) of Royal Decree 1720/2007 would have to be set aside.

On those grounds, the European Court of Justice Court (Third Chamber) ruled that:

"Article 7(f) of Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 must be interpreted as precluding national rules which, in the absence of the data subject’s consent, and in order to allow processing of personal data as is necessary to pursue a legitimate interest of the data controller or of the third party or parties to whom those data are disclosed, require not only that the fundamental rights and freedoms of the data subject be respected, but also that the data should appear in public sources, thereby excluding, in a categorical and generalised way, any processing of data not appearing in such sources;"

"Article 7(f) of Directive 95/46 has direct effect."

Such ruling is due to have strong impacts since consent is considered in several European member states—and not only in Spain—as a major criteria for processing of personal data; therefore, we may expect changes in the very near future. Also, as the Spanish Data Protection Agency imposed an important amount of fines in the past for processing of personal data without data subject’s consent, the agency may now have to reimburse such fines.

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